GST on services supplied by foreign Airline

[Kaustubh Karandikar]

XYZ (Freight Forwarder) taking services of the foreign Airline / Agent for importing the goods of the client in India of XYZ. The amount paid to the foreign Airline / Agent is recovered from the client in India by XYZ with mark up.

1) Is XYZ required to pay GST on the amount recovered from Indian Client with mark up?

2) Is XYZ required to pay GST under reverse charge on the amount paid to the foreign Airline / Agent as per Sr.No.1 of Notification No.10/2017 i.e. Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient.? In my view, as per Sr.No.20 of Notification No. 9/2017-Integrated Tax (Rate) dt. 28.06.2017 as amended, Services by way of transportation of goods by an aircraft from a place outside India up to the customs station of clearance in India is exempted. Therefore, answers to both the questions will be ‘NO’. Expert’s views please.

[Shilpi Jain]

Agree with the view stated since the exemption is service specific and does not matter who the service provider and the service recipient is

AI Summary

International air transport exemption prevents GST and reverse-charge liability on freight forwarder recoveries for import carriage services. Transportation of goods by aircraft from outside India up to the customs station of clearance is exempt; because the exemption is service-specific and independent of supplier or recipient status, the domestic freight forwarder need not charge GST on recoveries from the Indian client with markup and is not liable to pay GST under reverse charge on payments made to the foreign airline/agent.